Print Newsletter

May 2003 Newsletter

It is useful to note that the best time to contact your Wearne & Co partner to undertake any tax planning issues is just prior to the end of the financial year.  We have found that after completion of your third quarter Business Activity Statements is the best time to do this, as the majority of the financial year has been completed and a picture of what the financial year will be like can be formed. Transactions such as superannuation contributions will only have an impact on your taxation liability if they are undertaken prior to 30th of June.

For the tax year ended 30 June 2003, companies in groups, will need to consider whether or not to elect to enter the Tax Consolidation regime.  In general the disadvantages of not electing to enter the tax consolidation regime mean that most group companies will need to make the election for the tax year ended 30 June 2003, with their 2003 tax return.

Reasons for Electing to Enter the Tax Consolidation Regime

1. Ability to pass franking credits up from the subsidiary to the Holding Company, with the inter-company dividend rebate.
2. Ability to offset tax profits with tax losses of another group member.
3. Ability to shift capital asset between group companies with out triggering Capital Gains Tax.

Consolidation is a complex issue and we strongly suggest that if you have multiple entities that you contact your Wearne & Co partner to assess your position in relation to taking advantage of the transitional consolidation arrangements. 

Changes have been made to restore consistency between the income tax treatment and fringe benefits tax treatment of depreciation of cars to ensure employees with company cars are not disadvantaged. The deemed depreciation rate used under the operating cost method of valuing a car fringe benefit will be changed to realign it with the Commissioner of Taxation's determination for the effective life of cars.

The decision has the effect of reducing the FBT deemed depreciation rate from the current 22.5 per cent to 18.75 per cent Diminishing Value.  The new rate applies to cars acquired after July 1 2002 that are provided as a car fringe benefit and valued using the operating cost method.

This change will affect calculations for the FBT ended 31 March 2003.

The ATO has issued the reminder that any practitioner of natural therapies such as acupuncture, naturopathy and herbal medicine (including traditional Chinese herbal medicine) needs to be a 'recognised professional' by 1 July 2003 to continue to provide their services GST-free.  When introducing the GST law the Government deferred the recognised professional requirement to allow practitioners of acupuncture, naturopathy and herbal medicine time to establish self-regulatory national professional bodies.

A new section has been added to the newsletter on useful internet addresses.  This will contain internet addresses which will contain information that may be worthwhile further investigation when you are connected to the internet. This month's addresses are:

www.abr.bus.gov.au

Register by entering in an ABN or a Business name you can quickly check as to the legal owner's name of the ABN, and their registration as to GST.  This site will also allow you to apply for a Tax File Number, access and change your ABR details, cancel your ABN etc.

www.asic.gov.au

This is the site of the Australian Securities & Investments Commission. This site contains a wealth of information.  An interesting tool that is available is to be able to search for business names and company names and to search as to what ASIC documents have been lodged.

The ATO has commenced a mailout to all employers notifying them of the change in Superannuation responsibilities.  In summary Superannuation Contributions will be required to be paid monthly, rather than yearly as has been in the past.  You must notify your employees of the contribution every quarter.  More details will be made available closer to the first payment date of the 28 October 2002. As a reminder, in order to qualify for an income tax deduction you must pay your 9% Superannuation Contribution before the 30 June 2003.